Blog

Jan 23

The World Economy Is Growing

The world economy is growing at a faster rate than it has since the post-recession upturn in 2010. According to the International Monetary Fund, emerging markets grew at 4.6 percent this year. Combined with the 2.2 percent growth in advanced economies, it equates to 3.6 percent worldwide. This growth, combined with falling unemployment numbers, forecasts a strong uptick in global markets. But will that growth continue in the coming years?

The Organization for Economic Cooperation and Development (OECD) seems to think so, but they’re cautious of overestimating growth. In 2018, they predict a similar number, projecting 3.7 percent growth. For 2019, the forecast is 3.6 percent. Essentially, they expect growth to continue, but for the rate of growth to taper off and stabilize. As OECD chief economist Catherine Mann puts it, “We’ve got wind under the wing, but we’re flying low.”

Positive factors in this outlook include strong consumer confidence in the US and a boost to eurozone economies. The big area for concern domestically is the uncertainty surrounding President Trump’s proposed tax plan and how it will affect the economy. Internationally, the UK continues to pose problems for growth rate numbers. It still remains to be seen how the transition out of the European Union will alter Britain’s economy.

More generally, an increasing skill gap for tech-related jobs and the growing rate of employment are issues to consider. When employment goes up, normally so do wages, but that hasn’t been the case in recent years. Eventually, economists expect wage figures to rise in accordance with employment figures.

Nobody expects the bottom to drop out of the world economy soon. That being said, economists don’t expect growth rates to increase in 2018. And for the first time in recent memory, stability seems the most likely outcome.